The Federal Reserve has been counterfeiting dollars at a rapid pace. Amazingly, they want prices to rise faster (how nice of them). Well, they’re ultimately going to get what they want. Ron Paul tackles the great enabler of big government on today’s edition of Myth-Busters!

In his latest book, Jim Rickards warns that the coming financial crisis will be unlike the 1998 and 2008 crises. There will be no massive money printing to pave over the crumbling system. Rickards joins us to discuss what to expect…and how to prepare.

When Time-Warner announced it planned to merge with another major communications firm, many feared the new company would exercise near-total monopoly power. These concerns led some to call for government action to block the merger in order to protect both Time-Warner’s competitors and consumers.

No, I am not talking about Time-Warner’s recent announced plan to merge with AT&T, but the reaction to Time-Warner’s merger with (then) Internet giant AOL in 2000. Far from creating an untouchable leviathan crushing all competitors, the AOL-Time-Warner merger fell apart in under a decade.

The failure of AOL-Time-Warner demonstrates that even the biggest companies are vulnerable to competition if there is open entry into the marketplace. AOL-Time-Warner failed because consumers left them for competitors offering lower prices and/or better quality.

Corporate mergers and “hostile” takeovers can promote economic efficiency by removing inefficient management and boards of directors. These managers and board members often work together to promote their own interests instead of generating maximum returns for investors by providing consumers with affordable, quality products. Thus, laws making it difficult to launch a “hostile” takeover promote inefficient use of resources and harm investors, workers, and consumers.

Monopolies and cartels are creations of government, not markets. For example, the reason the media is dominated by a few large companies is that no one can operate a television or radio station unless they obtain federal approval and pay federal licensing fees. Similarly, anyone wishing to operate a cable company must not only comply with federal regulations, they must sign a “franchise” agreement with their local government. Fortunately, the Internet has given Americans greater access to news and ideas shut out by the government-licensed lapdogs of the “mainstream” media. This may be why so many politicians are anxious to regulate the web.

Government taxes and regulations are effective means of limiting competition in an industry. Large companies can afford the costs of complying with government regulations, costs which cripple their smaller competitors. Big business can also afford to hire lobbyists to ensure that new laws and regulations favor big business.

Examples of regulations that benefit large corporations include the Food and Drug Administration’s (FDA) regulations that raise costs of developing a new drug, as well as limit consumers ability to learn about natural alternatives to pharmaceuticals. Another example is the Dodd-Frank legislation, which has strengthened large financial intuitions while harming their weaker competitors.

Legislation forcing consumers to pay out-of-state sales tax on their online purchases is a classic case of business seeking to use government to harm less politically-powerful competitors. This legislation is being pushed by large brick-and-mortar stores and Internet retailers who are seeking a government-granted advantage over smaller competitors.

Many failed mergers and acquisitions result from the distorted signals sent to business and investors by the Federal Reserve’s inflationary monetary policy. Perhaps the most famous example of this is the AOL-Time-Warner fiasco, which was a direct result of the Fed-created dot.com bubble.

In a free market, mergers between businesses enable consumers to benefit from new products and reduced prices. Any businesses that charge high prices or offer substandard products will soon face competition from businesses offering consumers lower prices and/or higher quality. Monopolies only exist when government tilts the playing field in favor of well-connected crony capitalists. Therefore those concerned about excessive corporate power should join supporters of the free market in repudiating the regulations, taxes, and subsides that benefit politically-powerful businesses. The most important step is to end the boom-bust business cycle by ending the Federal Reserve.

Two nights ago, during the final presidential debate, the subject of the economy was covered. Since both candidates are interventionists, the prospects for the U.S. economy don’t look good no matter who happens to win. Ron Paul debunks the latest debate myths on today’s edition of Myth-Busters.

As global growth declines, the world managers at the IMF are looking around for someone to blame. The problem is protectionism and populism, they claim. Well they are partly right, but the problem lies also with the world managers themselves.

Hillary Clinton gave an “economic” speech this week (at least that’s what they called it). In truth, sound economics were nowhere to be seen. But there were a lot of profligate promises that were made. There were also a lot of myths. Ron Paul dispels them on today’s edition of Myth-Busters!

Ron Paul: Hello everybody and thank you for tuning in to the Liberty Report. Today is the day we do Myth Busters with Chris Rossini who is the co-host today and is also the editor of the ronpaullibertyreport.com. Chris, nice to have you with us today.

Chris Rossini: Good morning Dr. Paul, great to be with you.

Ron Paul: Very good. I guess it hasn’t been too difficult to find some of the fallacies that are floating around among the politicians and the economists. Right now, we are in the midst of a political campaign, if you haven’t noticed, so what will we be talking about today?

Chris Rossini: Yes, this week Hillary Clinton gave what was called an economic speech in Detroit and there wasn’t much economics involved, but a lot of promises were made, so we are going to go over some of those promises today. We will start with something that people love, especially on the left and that is free stuff and whenever they are promised free stuff, ultimately it morphs into an idea that they have a right to it. This year we heard about a right to healthcare and right to free college education, so it just spirals in that direction. Hillary didn’t use the word right in this sense, but there is always time, so you never know.

But, this is what she says, she says “I happen to think that we should be ambitious. We should push every household in America to broadband by the year 2020”, which is only 4 years from now. Dr. Paul, does government have any business being in broadband and promising it to everybody in mere 4 years.

Ron Paul: Obviously not, but there must be an ulterior motive, maybe the government needs faster spying arrangements, so they could spy on us in our houses and everyplace else, so they want a faster Internet service. This whole idea about rights and I think it’s very important, because people who demand something and want something and need something, it has been turned into a right. They don’t always say I have a right to this, but they are entitled to it, which is equivalent to saying I have a right to this, so all of a sudden now Hillary is saying that they need it and want it for the various reasons, we don’t want anybody be shortchanged, so they have a right to this and a need for it, so it’s up to the government to provide for this.

Obviously it’s wrong morally, it’s wrong constitutionally and it’s wrong for practical reasons too, because when governments provide, whether it’s healthcare, education, they always provide the worst kind of service. She is demanding this and it makes me think about a suggestion that I once made that what would happen if the government had been in charge of making sure that everybody in the country had a cell phone. That would have been a good goal, but what did the market do? We still have enough of the market left, there were a couple phone companies left, there was competition going on and I can remember some of the first phones that I had when I had a car phone and I thought it would be great for my medical practice. I spent a lot of money on them, they were big and bulky, the service was lousy and yet what happened with competition? The phones got smarter and smaller and cheaper and all of a sudden the government thinks, at least Hillary does think she can spread broadband to every household and be efficient.

I think that we can talk that would be very expensive. It is going to be inefficient and it’s obviously not the way to go, but yet people still fall into the trap of wanting this and of course she has to outdo Bernie Sanders, he has a lot of followers there, so it is something that they think is necessary.

I think some people are wrong in calling this socialism, because I think it’s the ill effects of democracy, pure democracy. If the majority wants it and if I win the election, the majority says let’s have free broadband and let’s have free this and that and free education, so it’s the dictatorship of the majority in a system that is not yet what you would classify as socialism, but every bit as dangerous.

Chris Rossini: Yes. Next, we will talk about taxes. Hillary Clinton says that she wants to make it simpler for small companies to file taxes. I am not sure how all the tax accountants out there would feel about this, but she said that it should be as easy as printing out a bank statement. Everyone knows that Hillary Clinton wants to drastically raise taxes, she is not very shy about telling us that, so does it really matter if it’s simpler to file if we are all paying more to the government of our earnings?

Ron Paul: It should be and it will be appealing, because that is a complaint, we spend a lot of money, billions of dollars, because the tax forms are complicated and we have to hire somebody to do it and yet just simplifying it, it could to exactly the opposite. We might make the case for a complicated form and a very difficult form and a cost to it and maybe this will finally wake up the people for their tax revolt and say we’ve had enough.

I think your point is well taken, she is not for lower taxes, she is not really for saving money and she is for collecting more. It reminds me of what supply siders argue. Supply siders are good people, they think a lower tax rate is beneficial to the economy and there is some evidence to this, but they are not interested in reducing revenues. One of the benefits of the efficiency of the system would be that there would be more revenues and that of course is more harm that the government can cause. Maybe we can compare this a little bit to the withholding tax.

The withholding tax was introduced during World War II and they wanted to make it easier to pay the taxes, so you don’t want to write a check to the government every month. They made it easier, they withheld the tax and people don’t even know that they are stealing their money and if they get ten dollars back, oh the government sent me ten dollars. But, the withholding tax was horrible in being able for the government to hide the fact that they are taxing a lot of people and the people are more complacent about it.

So, I think the taxes, when they are being paid, it should be made more difficult and at least not have the goal of making it easy and ignoring the problem that it causes and that is when the government takes the money, the penalize it and the worst thing is is when they start spending it, it causes a lot more trouble because it just enhances the size of the government, the bureaucracy undermines property rights and undermines our liberties, increases the chances of war being fought, so it’s the whole idea that it is a lot more complicated than simplifying the form.

It would be difficult for me to literally say that if we had a 20-page form to pay our taxes that I would be put in the corner and say I am going to vote for the 20 pages rather than the 1 page and that is why it is so tempting for people to use this and they take their mind off of the process, rather than why are they taking our money and we have to keep our eye on the ball, which means that essentially all politicians, no matter what they say, are in business to enhance the government and the government needs the money, so they will inflate, they will run up debt and they will increase taxes, so the simplification of this form offers very little relief for the average taxpayer, essentially nothing. It probably, quite possibly could do more harm than good.

Chris Rossini: Next, Hillary tried to appeal to Bernie’s supporters in this speech and it is not a big jump for her, but she was talking about free college for the middle class. Just to rewind back, the government in its initial attempt to help college kids, poured over a trillion dollars into student loans, which did nothing but drive up the price of college and then loaded kids with that. Hillary wants to keep on helping these kids and she says she wants to fight to make college tuition free for middle class and debt free for everyone. What do you think of this Dr. Paul?

Ron Paul: It’s a miracle and she’s a genius. I didn’t believe in miracles, but here we have a miracle maker. All politicians are miracle makers essentially. My simple answer to this is when you get something for free, what you are getting is worth what you paid for it. Yeah, free stuff seems like a good idea, but I think this educational thing which you alluded to is a good example of the people who are getting this free stuff and free education, are victimized by it, because they get a lousy education and they get introduced into a society that doesn’t have good jobs and they end up really paying for it. They end up, the fact that they don’t have jobs, they end up with inflation and all these other problems and then they are out of school and they might have to be retrained again, so the cost doesn’t bear down on the Wall Streeters who are able to get their stocks taken care of by the Federal Reserve and get their bailout, so the average person has been really snookered on this.

They are told you are going to get free stuff and millions and millions of the people say that is a good idea, not realizing the sacrifice of their sense of self-respect and self-reliance is great, but the sacrifice on what they are looking for in reality, that is their liberties and a sound economy and a good job. They are just deceived completely on this. This whole idea of a free education, it will be worth exactly what they pay for it and I just think that too many people are wishful thinking.

Right now, I think this debt, 1.3 trillion dollars of student debt, it will be removed, it has already started. As a matter of fact, I had a call on my cell phone, because they think I am so young and in college and it was a spontaneous call on my cell phone saying we are here to help you get out of paying your student debt, just listen to this program. Who would be doing this? It has to be some government program and they have my cell phone. They have my age mixed up, because I graduated at least 5 years ago from college and I don’t have any debt left to pay, so I think I wish they wouldn’t bother me anymore about paying off my student debt.

Chris Rossini: Finally Dr. Paul, despite his many faults, Donald Trump did say something recently that every Libertarian should love and that is he wants to get rid of the estate tax, which is wonderful. Now, Hillary Clinton obviously does not like the idea, she says that that alone would save the Trump family 4 billion dollars when Trump dies. That equals a 4 billion dollars tax cut and 99% of Americans would get nothing. Hillary Clinton does not want Trump to decide what happens with his money and this is the real revealing part, she says just think what we could do with that 4 billion dollars. What do you think Dr. Paul?

Ron Paul: I’d tell the fact finders to check this out. We don’t know exactly the amount of money Trump has, he embellishes on occasion, so some people argue that we don’t know whether it’s two billion or ten or twelve billion or whatever. But, then you just take the tax which is a certain percentage, but for the estate tax to collect four billion dollars, she is assuming, but it’s almost like if his estates were worth four billion, she is going to get the whole thing. That is what she is implying because she doesn’t know the exact numbers. I don’t think she has made the calculations because she doesn’t know what he is really worth.

But, the principle is still there. Should the estate tax exist, in the scheme of things, it really doesn’t amount to a whole lot, but in the moral sense it amounts to a whole lot and I came across a lot of people when I was in Congress, people in my district, which was considered a very, very modest district and never did I have a rich person who was worth millions of dollars come up and say the most important thing you could do Ron is to make sure we don’t have to pay this estate tax. I never had that, but I had a lot of people in the farming business and small businesses that might have a business worth 2-3 million dollars and land that they couldn’t sell if they had to and I knew of examples where people had to sell the land to pay the estate tax.

That’s terrible, it’s a total violation of property rights, but they are finally in the same principle of the income tax. The assumption is made that the government owns us, we don’t own ourselves and we don’t own the fruits of our labor, the government would tell us how much we can keep from our income and then when you do go, in spite of if you pay all your income tax and you still build a business and you have land paid for and you have a good business and you have some kids and they are likely going to inherit it and then the government comes along because of this envious nature of so many politicians, that say that they will take this away.

It’s just a shame, I talk a lot about the one-percenters who make a lot of money off the government and all the bailouts, but it’s still a shame that people from the far left, who make millions and millions of dollars, I understand the socialist candidate just bought nearly a million dollar house, his third house, to set a good example for his socialist friends. But, this whole idea that they can take this money because they are envious of people, but they are not setting a very good standard, they are not Mother Teresa and sending a sort of a moral standard. It’s always political power and they are never thinking for a minute that they are going to take money away.

There will always be a loophole for their friends in Hollywood and in the media. They are not going to all of a sudden have to cough up and besides they might not even be intending this. This is just politics as usual. Rich people are bad people, they don’t distinguish between rich people who earned it versus rich people who stole it from the taxpayer and got it in the military industrial complex. That is where the immorality comes, but it is the principle of self-ownership and property rights that I think is so important.

You say what are they going to do with this money, won’t it be very complicated? Not very often, there is sometimes fights over estates, but for the most part I would think that a large, large percentage of people in this country have wills and they have all sizes of estates. Sometimes it goes uneventfully. They just give their estate to their kids and allow them to divide it up or do with it what they want. It’s a contract. You earned the money, it’s yours. You save your money, you have an estate, you have a farm, you have a business, you don’t want it to be broken up and you write a will, this is what I want done with this.

This is abhorrent to the far left and the interventionist, because they believe that it is theirs and they have a right to decide what should be done and they have two things that they used to do this. First, they use guns to do this, that is if you don’t obey, you could have the IRS knocking on you door, you could go to prison and everybody is terrified of that and also they are terrified of that, they just are scared to death of what will happen and they think if this gets too hot and heavy, every once in a while you realize this when the heavy hand of government comes that there is a conflict and so they take the guns away from the people.

But, they want the guns and they want the wealth and they want the control and they even go to the point that a lot of this is undermined even without the estate tax, because they can take property by taking, they just take your property by regulations and put so many regulations on that you have to break up property, you can’t do this, you can’t sell this property, because they want to be the owners, because they are the smartest people in the world and they will not trust the people. But, the people they pick to put in office to take care of us and rule over us, they happen to be smart people.

Fortunately, right now, the people are waking up and realizing that the politicians and the bureaucrats and the professors who teach lousy economics aren’t able to take care of us, ourselves and that is why we live in an age where we have a tremendous opportunity to offer them an alternative and of course that alternative is very clearly the free market and personal liberty.

Chris I want to thank you very much for being with us today for another Mythbusters program.

Chris Rossini: Thank you very much Dr. Paul.

Ron Paul: Good and I want to thank all our viewers today for joining us and please come back soon to the Ron Paul Liberty Report.

Last Friday saw the release of a bombshell jobs report, with headlines exclaiming that the US economy added over 250,000 jobs in July, far in excess of any forecasts. The reality was far more grim. Those “jobs” weren’t actually created by businesses – they were created by the statisticians who compiled the numbers, through the process of “seasonal adjustment.” That’s a bit of statistical magic that the government likes to pull out of its hat when the real data isn’t very flattering. It’s done with GDP, it’s done with job numbers, and similar manipulation is done with government inflation figures to keep them lower than actual price increases. In reality there are a million fewer people with jobs this month than last month, but the magic of seasonal adjustment turns that into a gain of 255,000.

Delving further into the jobs report, we see that many of the jobs that were supposedly created were jobs in government and health care. Government jobs, of course, are paid for by siphoning money away from taxpayers. And health care jobs are increasingly created solely because of the ever-growing mandates of Obamacare. Other major sources of job growth were temp jobs and leisure & hospitality (i.e. waiters and bartenders). These aren’t long-lasting jobs that will contribute to economic growth, they are mostly just jobs that cater to the tastes of the well-to-do who continue to benefit from the Federal Reserve’s easy monetary policy.

As New York, San Francisco, Washington, DC, and other political and financial hubs continue to benefit from trillions of dollars of debt-financed government spending and the trillions more dollars the Federal Reserve has created from nothing, the politicians, lobbyists, and bankers who receive that money demand ever more exotic food, drink, and entertainment. The jobs that arise to satisfy that demand, we are supposed to believe, are the backbone of the job market “recovery.” Yeah, right.

Eight years after the worst part of the last financial crisis, the US economy still has not fully recovered. The number of people employed may have finally begun to grow past its pre-crisis peak but the quality of jobs has deteriorated, and the number of people who are still looking for jobs or who have even given up looking for jobs and dropped out of the labor force still numbers in the millions and shows no signs of shrinking. Quantitative easing, zero or negative interest rates, and other inflationary central bank policies cannot lead to lasting job creation or economic growth. Try telling that to the central bankers, though. They only care about aggregate numbers, not what is actually behind those aggregates. A castle built of sand is the same to them as a castle built of stone.

Until the notion that wealth and prosperity can come from a printing press is eradicated from the thinking of policymakers, economies around the world will remained mired in this malaise. Jobs are created by meeting consumer demand. If you provide the goods and services that customers want at the price they want, your business will grow, jobs will be created, and everyone in society will be better off.

If, on the other hand, jobs are created through government money creation and heavily protectionist laws and regulations, those jobs will not meet the needs of consumers, will add nothing to productivity, and ultimately will not last. When politicians pursue policies that incentivize jobs like the latter to those of the former, economic stagnation is the unfortunate but predictable result.

We’ve lived through the illusionary “good times” of the Nasdaq and housing bubbles. They were followed by inevitable and heart-wrenching crises. Well the government and Federal Reserve have created another major bubble in government bonds. Today on Myth-Busters Ron Paul takes a look at how it came to be, what we can expect, and how we can protect ourselves.

Ron Paul: Hello everybody and thank you for tuning in to the Ron Paul Liberty Report. Today is the day we do the program called Myth Busters and the co-host is Chris Rossini. Chris is also the editor of the ronpaullibertyreport.com. Chris, nice to have you with us today.

Chris Rossini: Good morning Dr. Paul, great to be with you again.

Ron Paul: Good. I understand that we have a few myths about the budget and bonds and that sort of thing that we want to talk about today.

Chris Rossini: Yes, we are actually going to be talking about another bubble. We’ve covered in previous episodes the stock market bubble and the housing bubble and now we are going to be talking about a real big one and that is government bonds. So, Dr. Paul, we will start with the basics of government bonds, if you could talk about how government bonds affect the economy when they siphon resources, when we give money to the government away from private entrepreneurs and also the morality of lending money to government that must be paid by future generations with taxation. Is that moral?

Ron Paul: The question is it moral and the other question is is it reasonable or sensible. But, anyway, the real myth dealing with government debt is the fact that we have been told by a lot of people in our economic classes and in the media and government that you shouldn’t worry about the debt, the debt is good, because it is useful to manage the economy and manage the monetary system. They think debt is very good and they don’t worry about it. A few of us still worry a little bit about the debt, especially when it’s 20 trillion dollars and growing exponentially and nobody has any desire to cut back on it, but the basic problem is that the role for government that the we are working with today is that the government is supposed to take care of us from cradle to grave and fight wars endlessly and be the policeman of the world.

So, this role for the government has been endorsed by the people and still is to a large degree, which means there has to be a lot of spending, but generally speaking most people think if the government is spending a lot of money you have to raise the taxes. So, is this problem that we have debt and we have to borrow money, is this a problem that we don’t have taxes high enough and then we could balance the budget, or is it too much spending and I think most listeners to this program would say we come down to the side that it is too much spending.

The way I see this is when the government spends money and they don’t have enough money, they do several things. One is there is pressure on to raise taxes, but that is not as popular, but the next things is to issue bonds and the Treasury can issue bonds and put them out in the market and a lot of people will buy these bonds. Not so much the average investor anymore, because they don’t make a whole lot of sense and why buy bonds, short or long and essentially not earn any interest.

This then causes the government to find other people that will actually buy these bonds, but then if they create new money to buy it and the Fed facilitates this, all it does is raise the price of the bond. When the price of the bond goes up, the interest rates go down. When the interest rate is zero, the price is very high. If a bond is zero rate of interest and it’s a 100 dollar bond, you have to pay 100 dollars for it, but if it’s a year, two or three, you get your 100 dollars back and no interest, but that 100 dollars is going to buy less, so it is a ridiculous economic policy. It’s all geared to facilitating big government, that they can keep doing this.

The amazing thing is it keeps working. But, as you indicated in your question, doesn’t this take something from the economy and put it in the hands of the government? Absolutely it does and it interferes. I think there are two mistakes here. First, when you take it from the economy and if we weren’t inflating, it would still be a problem, because it’s taking real assets from the economy and the people who do productive things take it away.

So, let’s say that there is still enough inflation for the business community to invest and do some business. Why should this be so bad? It is still a drain, one way or the other. It might be just through the inflationary forces and other things, but the other thing is taking wealth and productive efforts away from the people, means that the government will be spending the money. Now, the government is spending 40 percent of the money and that is a double burn. I think the people get hit twice. Once they take the money and once the government spends. If the government took the money and burnt it, we would be better off than for them to spend it, because what do they do? They fight wars and they create dependency, they create weak economies, they create all these rules and laws that destroy our economy through regulation.

But, it is the process of debt. It starts with the idea that debt is not to be worried about and we hear that from the Keynesians, we hear it from the Paul Krugmans that debt is actually a benefit. One of the worst things is that in the old days when and what the Founders intended, that if you issue a currency, a paper currency, it would have to be redeemable with something. So, if you had silver in the bank you could issue silver certificate or a gold certificate. Then we drifted away from it, we went down 40 percent and then finally when we had the Bretton-Woods in ’44, we took the gold away from the American people, but not from foreigners and the in ’71 that all disappeared and eventually that broke down too.

What they do is they take these bonds and they monetize the bond. So, if you have a paper currency, it’s backed up by something, it’s backed up by government debt. So, people get conditioned to think about government debt is good, because you can print more money, it stimulates the economy and the economy grows. They concoct these weird theories and if they work accidentally on the short run, right now it doesn’t work or we would have a tremendous boom, by having more government debt in these last 6-8 years and it hasn’t produced.

The real culprit is the debt itself and the principle of government and it’s very detrimental to the economy for these various reasons that we just mentioned.

Chris Rossini: Yes, I agree with you on the conditioning. Many people are under the impression that they have an illusion of safety with the government bonds, that is backed up by the full faith and credit of the US government and that is a bad institution to put your faith into. But, the other institution that has a big role in this in creating the bubble is the Federal Reserve. They created the stock market bubble, the housing bubble. So, please now talk about the Fed’s role in creating the bond bubble.

Ron Paul: The Federal Reserve is responsible for all bubbles. Not all the ups and downs and fluctuations in the free market, prices go up, prices go down, increase supply and supply and demand and there is a little bit about that goes on. But, when you see economies boom and then go into a bust cycle, this is all central banking’s fault, because what they do is they create low credit. Now, I want to put up a chart, a chart that has been produced many times and it reflects what the Fed though they had to do for the crises that we had in ’08 and ’09, because what they resorted to and they thought the solution would be, just massive inflation, which means massive injections of funds.

On this chart you can see where the darker line there, that was the recession of ’08 and ’09 and you can see that the monetary base was around 800 and it goes up over like 42, so it was like 5 times increase in all those years and they keep still hoping and wishing that there is going to be economic growth.

Every once in a while they come up, like today, they say there was economic growth, there were new jobs today, but they didn’t mention that they were bureaucratic jobs, low-paying jobs, Obamacare jobs, industrial jobs and consumer jobs, didn’t come up at all today. So, there is a gross distortion of what happens. But, the bubble is created by the Fed, lowering interest rates, causing businesspeople to lose the most important signal to them, to know when to go into production and build new plants and expand. It should be done when people are not spending as much and they are saving the money and get the interest rates down and the businessman says interest rates are down to three percent, it used to be four and a half, I think this is the time for me to borrow and go into some productive capacity.

But, what happens if the interest rates not only go to three, but to two, to one and the businessman says wow, look at this, this is the time for me to do something and then the money, it is unpredictable where it will go. If we could all keep going into production, it’d be fine, but it doesn’t work that way, because you can produce and nobody wants your products, so it’s a gross distortion. But, the money has to go somewhere and they keep saying we wanted to go into consumers, where the consumers will spend and raise the inflation, that way we can run the inflation rate of two percent, assuming that prices going up is a sign that the economy is good, which doesn’t make any sense whatsoever, so they keep working on that.

The one thing that happens is that when the Fed increases the supply of money and lowers interest rates, they can do that. On some occasions, on milder recessions and things, sometimes they would get us out of recession, they never get blamed over the years for the recession and the bust, but they get a little bit of credit for saying yes, we make times good, but we never cause harm. But, the truth is they have no idea where the money is going to go. They can create money, but they don’t know whether the people will take it and invest with it or whether they are going to pay off debt or just what they will do or whether they will push up prices and the bubbles that you talk about like the financiers and the people on Wall Street took the credit back at the end of the last century and pumped it all into the NASDAQ bubble. Then, as the first decade occurred in this century, it went into housing. Gross distortion because there was money to be made on the quick, never admitting the fact that all these busts have to end badly.

I think this is what we are facing today, that the bubbles are there, they are numerous, they are bigger than ever, the dollar bubble is a worldwide phenomenon, there is gross distortion, everybody is racing to have zero interest rates and it just can’t work. It can pacify some people for a while, it can make the bubble get bigger, people can be reassured, but less so than ever before, because I think if people get confused about all the statistics the government gives us and distorts, they ought to look at the anger factor. How many people are angry and upset with the conditions in this country today, not only the social conditions, because that is secondary to the economic conditions. There is a lot of people very unhappy, just take the young people who owe so much money for going to college and getting degrees that aren’t worth much for jobs that don’t exist and they are very, very annoyed. The parents are probably annoyed too, because they are in for spending all these money.

That figure of who is unhappy with their economic conditions, which very often leads to the social unrest in the inner city, because the conditions get worse and the poor get poorer, so I think this is the problem that has to be resolved. I think this is something that we can resolve, of course as soon as we come to our senses and decide the government has to shrink. But, the government’ can’t shrink unless the people change their minds and lose confidence that just spending money and running up the debt and printing the money is the solution to the problem.

What makes the correction and what happens. All the bubble have to end badly, there has to be a bursting of the bubbles and we’ve had it, we mentioned that the NASDAQ bubble and the housing bubble, but now the bond bubble is going to burst too. I look at this, when this happens, it is going to be a calamity and for me I look at it like there is going to be a flock of black swans that will come, not just one thing that happens, there will be so many things around the world and that is going to be horrendous. If interest rates go up one percent, it is estimated that there will 2.4 trillion dollars in losses. You could have interest rates go up one percent in a day under certain circumstances, what if it goes up two percent? I mean, it is so huge.

This is why the Fed and the world money managers are so desperate to try to keep this thing going, but they are going to be unable to keep it going. We always see signs that people are worried about that, because they are going into real assets, gold has been generally strong over the last several years, hard assets are being advised by a lot of conventional investors and even though the stock market is still up there, there is people getting very nervous, some of the trades that have been around a while are getting very nervous and antsy about the stock market, because I think there is going to be the bursting of this bubble, there has to be the retraction and the elimination. And this is the purpose for this to make the correction.

The people don’t insist on government spending less and getting us out of this mess, but the market is very, very punishing and very demanding. There is a limit to the debt and debt has to unwind. Debt is generally built on pyramiding of debt and fractional reserve banking and once that is reversed you have to reverse the whole principle of the building and the inflating of the bubble. I think that is what we are facing today. We are facing that and it’s coming and it’s a very precarious situation which we are facing.

Chris Rossini: Finally Dr. Paul, let’s talk about how we can protect ourselves from this ultimate calamity that is in the future. What advise would you have for those who have loaned money to the government and what can they expect in the future. What do you think they should do?

Ron Paul: I wish there was an easy answer for that, but we have to do something. Doing nothing isn’t going to be helpful. I start with what we should do especially when I talk to the young people who are trying to figure out how they are going to run their finances for the rest of their lives. One thing that I practice over the years is I went two-fold. One was I invested time and money and energy into education in order to try to preserve and protect our liberties, because I am convinced that as messy as it is and as bad as it is and how devastating it could be, if we have our liberties, we could solve all our problems. If we just get all the debt that was liquidated in one day, we all were broke, but we had our liberty and we could go back to work and work with sound principles. Believe me we would get over this rather quickly.

I think that is one thing that we could do, but people ought to have cash around to take care of their interest. You should be spending and putting some of the money in gold and silver coins and you should be getting prepared. I think a little bit of land is very important, I think having a skill is very important. At times it can get very bad, if you have a skill, you can be finding work and today it’s all kinds of skills. There used to be carpenters and mechanics and all, but now it’s in computers and repairing computers and all these things, so having a skill is very, very important. It can be solved, but ultimately, the solution is the protection of liberty and that of course has been the goal that we have been seeking for so long.

I want to thank you Chris for being with us today and I invite all the viewers to come back soon to the Ron Paul Liberty Report.

We’ve all heard of the term “lying with statistics,” and boy does the mainstream media get high honors for that practice. But today Ron Paul is going to cover “lying with government statistics”. He discusses the myths that surround GDP, the misleading CPI, unemployment and more. Get the truth on today’s Myth-Busters!

Ron Paul: Hello everybody and thank you for tuning in to the Liberty Report. This is the day we do Myth Busters, our co-host today is Chris Rossini and Chris welcome to the program.

Very good, this is the day we go over some of these fallacies that are floating around and the reason people do dumb things, because they have been taught some of the myths and say that it’s economic law and we try to sort this out and say that economic laws are a little bit different than sound economic policies. It is not what conventional wisdom, especially the conventional wisdom coming out of our universities, coming in from the liberal, Keynesian type economists. So, what do you have for us today on our program?

Chris Rossini: Most people have heard of lying with statistics and I have to say that the mainstream media is expert at it, they deserve high praise for the charts that they put up and how they manipulate things. Today we are going to be talking about lying with government statistics. Now, government is in the job and it shouldn’t be of gathering all types of stats that can help it with its central planning.

We will start with the GDP, which is a big one, there is always focus on it and supposedly it is supposed to tell us about the health of the economy, but we libertarians think that it is very poor measure, because it accounts government spending, which we consider a negative. So, Dr. Paul if you can talk about GDP and you can even throw in the F-35 into your story as well.

Ron Paul: That is the myth that the GDP has some relationship to our economic health, but that is what they want us to believe because they can fudge the figures and that is basically our program today, we are going to be talking a lot about how the government fudges the reports and deceives the people, but the GDP is one of those things that work that way. In Henry Hazlitt’s book about the broken window in Economics In One Lesson, he talks about the broken window, that somebody breaks a window and somebody has to repair it and he talks about who made the glass and who put it in and it was an economic benefit, because all these people got their jobs and everybody made it, it took several layers of labor to put this together and say breaking windows is an economic benefit. But, that way you are going to say let’s go out and break a bunch of windows.

That is the way they more or less look at GDP if you spend money. But, what they fail to do and Henry Hazlitt has mentioned, instead of what, yes, you spend money on repairing, but you just got back to neutral and you just got back to what you had and you have to do it, somebody might benefit because they have a job, but the total GDP doesn’t go up, the wealth of the country doesn’t go up, because if that were the case then you come up with silly ideas. As a matter of fact we do have silly ideas. Some of the Keynesians say that it is even beneficial if you can’t get the economy going, hire a bunch of people to dig a hole and pay them to do it, because they will spend the money and they will stimulate the economy and then they will have somebody else come along and fill in the hole and pay them and that will help stimulate the economy and they say that is a net increase.

It doesn’t make any sense whatsoever, because there is no benefit. What if that money had been spent on building a house, what if it had been a real job coming out of the marketplace, there could have been more jobs and these individuals building a house, but just to spend money is a dilution and a distraction and very, very damaging. So, this idea that the GDP is going to answer our question and you mentioned in the opening about government spending.

Government spending is a big element in calculating the GDP, even though they will say it is 3 or 4 percent. There is a lot more than that and all the secondary expenditures that come from military spending. But, the biggest boondoggle I think that anybody has ever recognized and there has been plenty throughout history on military, it has been our F-35, it has been around for years now and nobody defends it, it doesn’t work, the military doesn’t like it, but the politicians do and the promoters of those who built it. They didn’t build it in one state or one city and say ok, you guys have had the benefits and we don’t need the airplane, we are going to catch on. No, they put some parts in every state essentially, so the politician, his job is to take care of his people and it’s good for our economy and it helps our GDP, but it’s all distractions, it’s taking money from one thing and giving it to another.

People should always question the fact when they see the GDP going up on what it really means. When I think GDP is a reflection of government spending, it’s doing the opposite, so instead of adding that in, I think you should subtract it, because it is taking it out of the economy and yet why couldn’t you have perfect growth and some people agree, but why shouldn’t the government just been and that argument is going on right now, the government should spend a lot more money on infrastructure.

Maybe they should and maybe they could, but if it is coming out of the thin air by printing money and claiming that every project is going to be beneficial that the government makes, because there may be one highway that is beneficial, but for the most part, most of it will be political, most of it will be a lot of waste, it will be satisfying the special interests and it will be a long way from the project and that is why so many of those things should be done close to home.

But, this whole idea that if government just spent more money, the GDP will go up and the number will go up, but it’s also the reason why there is a disconnect with these favorable economic indicators in the GDP and the people who are unhappy. It also is a reflection of what we are facing today. The millions of people who are out of work and unhappy and inflation is bothering them, so they suffer from this and yet the government says the GDP is doing ok, but actually with the government statistics it is not doing that well, but it’s a lot worse than they try to tell us.

Chris Rossini: Next, let’s move to the CPI, the Consumer Price Index and like yourself Dr. Paul, I am an American citizen and I pay bills, electric bills, gas bills, groceries and I can tell you that they go in one direction and a that is upwards. Never do I get a letter telling me great news, because we have sound money and increased productivity, we are going to cut your prices. That never happens, it’s always upwards.

But, the government and the Federal Reserve want me to close my eyes to the reality of life and they tell me that their CPI says that there is barely no inflation. In fact, some of them claim that it is too low. So, please explain the nefariousness of the Consumer Price Index.

Ron Paul: Yeah and it’s obvious that the prices are going up a lot more than they would admit and it is rather ironic that they want to make prices go up faster, 2 percent at least. Of course if it is going to git 2, it is going to hit 4 and 6 and 8 and they won’t have any control of it. But, they think prices going up is healthy to the economy.

The truth is if you really have a healthy vibrant economy with sound money, what goes up is the purchasing power of your dollar and that is what is wonderful. The nominal rate of wages may be not automatically escalating. Today, it has to escalate to try to keep up with the cost of living. But, they try to tell you that the CPI is not going up, it is going up way less than 2 percent and if we could only get it up to 2 percent this would be a reflection of a healthy growing economy, which is total nonsense.

When governments mess up, it causes booms and then there is a recession, actually what you want to do is see prices come down. In the depression of the 30s, they were hysterical about that. They wouldn’t allow the price of food and farm products to go down because we had to protect the farmers. At the same time they kept the prices up by getting rid of and plowing crops under and saying the prices will go up and everybody is going to be happy. They look at prices and prices are very secondary to it, but inflation, price inflation is different for different people.

Chris your inflation rate might be different than Donald Trump. You think Donald Trump sits around and worries about the cost of a loaf of bread? A lot of people do and they have to content with it. So, if you are retired and they say there is no cost of living increases, you are on a fixed income, but your prices are going up for food and medical care and all these kind of things. Your CPI is much, much different.

The other thing that government does just to further deceive us, if it does move up like it did in the 70s and 80s, they will change the way they calculate it. So, we have a basket we are looking at, so they changed the way we calculate it and then it doesn’t look so bad.

John Williams who measures this stuff from a free market viewpoint that even today if he measures the old-fashioned, the Fed should be very happy, prices are going up 4 percent. But, they are in denial and they change it and it is all for the benefit of propagandizing what the government is doing.

I have a couple of rent houses here in the Texas area and we had a problem with flood here recently and one of my houses got water in it and I had to change the carpet out. It was not good, because I had changed that 4 years ago, so I went to the same person again and the prices went up and I said just put this in and I paid such and such and he says yeah, but there is inflation and the cost went up 30 percent in about four years. That is a pretty good things, but that is not going to be reflected in the cost of living.

Also, they look at prices of houses, if the housing prices aren’t going up a whole lot, but if the rent is going up, they might exclude the rent and rents right now are very, very high. So, the CPI is done just for mischief and they say that is a measurement of inflation. I am very careful on this, because everybody thinks that is what it is, that’s a reflection on inflation.

I do talk about price inflation, the rate the price is going up and that is not inflation. Mises addresses this in Human Action and he says I think, I used to argue with myself, this is just semantics, because he says that inflation is the increase in the supply of money, but he said no, it is more than that, it’s done deliberately, because if you say the results of your problem came from monetary policy and the Federal Reserve, that is a different story, but if you deal with prices, then you can blame the businessman or the oil producers or something else, but it is never the Federal Reserve and printing money.

There is a mischief in this thing of making people think of our price increases, rather than thinking about what the Fed is doing to us.

Chris Rossini: Yes, next let’s cover the unemployment number and it seems like no matter how difficult or challenging things become in the real world here, government is always there to tell you how great things are and they can point to their unemployment number and once again just speaking from my limited sphere of influence I could see how hard it is to get a job and the types of jobs people are trying to get, sometimes two or three of them, so it is very difficult, yet the government can point to its unemployment number, but it doesn’t really show the true picture. Can you please talk about that Dr. Paul.

Ron Paul: Yeah, deception once again, can you believe that? The Department of Labor and the Fed doesn’t even agree on the definition on these things, but there is something put by the Department of Labor called U3, which is what you hear about on the news all the time and they say that the unemployment rate is 4.7. That is fantastic, but they don’t talk about the 94 million people who aren’t counted anymore and every year there is more people that are just dropping out of the workforce.

It is easier to do that and nobody worries about them, because we still have an ability to further debase the currency by printing more money and giving welfare checks. In the old days they would be visible, be waiting in lines to get some food to live on. See, that is a good system, they are taking care of the poor people. Yeah, but it doesn’t last and we are facing up to this.

But, even the government admits that there is another thing, the 4.7 is called U3, but there is something called U6 and the government does count more people, some that are marginally employed or that are part-time workers and that unemployment rate is 9.7. That is much closer to what the real unemployment rate is. Then, we get even more confusion because when we talk about this on John Williams who does these shadow stats and private individuals calculating this, he claims that the unemployment rate if you are measuring like we used to back in the depression days, he claims it’s 24 percent.

That is astounding, but it would also explain why so many people are unhappy and angry and then you come along also and add on to that the people’s wages that have been stagnant, who are just barely making it, so you have this unemployment which is real, but you have these jobs that aren’t paying off, all a reflection of what the government is doing and debasing the currency and making people much poorer and the government not willing to admit it, because this way even a conservative will say all we have to do is lower taxes and regulations, which I am all for, but they don’t address the subject of where does the business cycle come from, can you do that, will it work if you don’t liquidate bad debt and liquidate malinvestment and these other things don’t work and that is why the Keynesians’ arguments don’t work either. They say in the past that it would give a boost to the economy, lower interest rates and that gives a benefit to some people and also spend more money and run up the debt.

But, it’s all done because we are ending this. The system doesn’t work anymore, just as the European Union doesn’t work anymore, our system here at home of economic policy doesn’t work and the people will catch on and find out the government just haven’t been very straightforward with us.

Chris Rossini: Yes, and we will end along those lines on commissions. This isn’t necessarily statistics, but commissions are like when government sets up groups of people to investigate itself and I always have a crooked eye when I hear about that. One example recently in Afghanistan when the United States bombed the Doctors Without Borders hospital, killed a bunch of people and the US says now we are going to investigate ourselves, even though the foreigners wanted an independent investigation, so the US investigated and found out that they were not at fault.

So, Dr. Paul please share your thoughts on commissions and specifically you were on the commission, it was called the Gold Commission back in early 1980s with the Carter and Reagan administration. Please draw on that experience as well.

Ron Paul: Yeah, it’s pretty commonplace for the people who committed the crime to investigate it. The Justice Department does it and other bureaucracies in Washington do it and Congress is always investigating itself, but not much beneficial comes of all this. But, there has been a lot of commissions, I understand that in history books they still argue about the investigations after Lincoln’s assassination, there is still a lot of questions, did one individual do it. Of course in recent history, one that the American people don’t believe at all, 80% of the people don’t believe the commission of the Kennedy assassination, because they think that the government just doesn’t tell the truth.

My theory is that the governments have commissions to investigate, but it is never to get the truth out. That is not their goal, their goal is to cover themselves and make sure that they don’t get blamed, put the blame somewhere else. Some people argue that they create these problems and then they cover up. Maybe sometimes, but I think basically problems happen and then it’s their goal to make sure how inept they were, it is not revealed.

Right now there is this challenge about has the FBI messed up on their investigations to make us safe and secure and the answer is no, they need more money and they need more lists of people, put us all on a list and more violations of our civil liberties, so it is always going in the wrong direction. They use these problems to justify even more government.

But, the 9/11 Commission, right now we have been struggling with the help of several members of Congress to get the 28 pages from the Senate Commission report and find out what they said. Of course there is information there about our close ally, our civil libertarians over in Saudi Arabia and they don’t want that revealed. I remember so clearly, right after 9/11, I couldn’t get home, I couldn’t get on an airplane from Washington, but believe me it was in the news that the Bin Laden family, of which there were many, was ushered out without questioning, the FBI asking them any questions. The 9/11 Commission investigates this, but didn’t find anything and now we are still struggling to even find out what the 9/11 Commission did find and what it means.

You mentioned the Gold Commission and this is another example. The Bretton-Woods broke down in ’71, they got me really involved in economic policy and one of the reasons I ran for Congress, so I was very much involved in monetary policy. But, that was hectic, gold went from $35 an ounce to $800 an ounce and it was a miserable economic decade, so at the end of the decade Carter was in and the economy was lousy and Reagan was running. Jesse Helms and I got together and we had a bill to create the Gold Commission, figuring that is one Commission that is legitimate.

But, as usual, it didn’t work out so well for our position, because yes, they appointed people, they appointed people from the Federal Reserve and Treasury, a couple Congressmen that were, I remember Henry Royce hated gold, he was a chairman of the banking committee, so he got himself on and I was in the Congress from Washington, I was the only one, there were a couple civilian appointees and Lewis Lehrman was appointed and he was very sympathetic to gold. So, it turned out there were 15 people that said gold was stupid and two people that thought it was worthwhile thinking about.

But, the goal was supposed to be what should the role of gold be in our national monetary system and international system and obviously the conclusion was none, after having a decade of total failure with fiat money and total failure of Bretton-Woods, but that was an attack on government power, because as long as they had ability and the people would accept the printing press and control of this by people doing it in secret, they weren’t about to let the country know that maybe we ought to go in a different direction.

What I am impressed with today’s conditions are getting more people in the regular media talking about maybe we should be talking about the gold standard and especially with the chaos of the breakup of the European Union and Brexit, gold has been a fantastic protection against that. Gold benefited twice as much as the dollar, even though the dollar is a reserve currency and people went to buy dollars, a lot more people went to buy gold, so the protection was much greater in the gold standard or actually owning gold.

But, anyway Chris thank you for being with us today.

Chris Rossini: Thank you Dr. Paul.

Ron Paul: Good and I want to thank our audience for joining us today on this program called Myth Busters. Please come back soon.